Good morning and good afternoon ladies and gentlemen and welcome to the Millicom Financial Results Conference Call. Today’s call will be hosted by Hans-Holger Albrecht, President and CEO; and Tim Pennington, CFO. Following the formal presentation by Millicom’s management an interactive Q&A session will be available. I would now like to turn the conference over to Nicolas Didio, Head of Investor Relations. Please go ahead.

Thank you and welcome everyone to the Millicom second quarter results presentation. And today’s presentation materials can be found on our website, www.milicom.com. Before we start I would like to remind everyone that the Safe Harbor statements will apply to this presentation and the subsequent Q&A session. With me today on the call are our President and CEO, Mr. Hans-Holger Albrecht; and Mr. Tim Pennington, our CFO. I will now hand over to Hans-Holger to give an overview of our Q2 results and operational performance, after which Tim will take you through the financials, and we will finish with a Q&A session.

Thank you Nicolas and good morning and good afternoon from Stockholm and thank you for joining us today. Joining me here for the first time as well on this call is our new CFO Tim Pennington so welcome to him too. As Nicolas said we will take you through the highlights of the first six months and our priorities for the rest of the year and we will then take any questions you may have. But before going through the slides I would like to provide some highlights from the quarter. First I think we’re pleased with the continued delivery on our growth plan across all regions. Millicom has had a good first six months, we continue to focus on investments in our growth strategy and so organic growth of over 9% in the second quarter. We continue to see strong potential in the markets in which we operate and focus on our transformation plans for the group. I think our performance in Africa has been particularly pleasing with close to 16% organic growth year-on-year. Looking ahead we expect to continue to take market shares in Africa. Equally South America has also driven the growth across the group up 14% year-on-year, Columbia continues to grow strongly in the quarter thanks to market share gains. Our shifting focus on mobile data consumption is paying off and we are seeing increased take up of data and increased penetration of data product. Our cable and digital media business grew by 16% in the quarter, we have now completed the roll-out of our Tigo Star brand in five countries and we see a strong appetite in those market for our digital services. The mobile financial services also took a further stride forward with another 100,000 users. Our commitment to innovation continued with Africa’s first…

Thank you and I will take you through the financials and then Hans-Holger will summarize and then we will go to Q&A. So let me start slide 14 by echoing Hans-Holger saying that it's been pretty decent quarter. We’re seeing increased penetration in smartphones, increased penetration in data products, cable is growing strongly, our other digital services since it's a World Cup promotion and drawing customers to the network. A bit also as Hans-Holger said it's having an impact on our margins. So we had revenues accelerating 9% organically, 6.6% on a recorded basis taking our revenues to the quarter to $1.45 billion. And that partially reflects very strong revenue growth in Colombia, Africa and the cable media business. EBITDA ended the quarter of $471 million again inline with Q1 and a margin of 33.1% in the quarter and a 33.5% year-to-date. It's a little bit light on our internal forecast but that’s partially reflecting the higher volume of gross additions we have seen in Colombia and the increase in business development. Incidentally we’re focusing on EBITDA after corporate costs and unless I state otherwise please assume that we’re talking about EBITDA. It's the Group EBITDA after all of the operating cost of the business. And we’re on track on our investments CapEx is rolling out, it came in at 367 million on a balance sheet basis, that increased to $80 million for license renewals in Chad and the Honduras and finally adjusted earnings per share was $0.27. Now adjusted earnings per share is figure we will use going forward, it's basically taking basic EPS and adjusting it into non-cash, non-operating items like the change in the volume and the put option and currency movements including derivatives. There is a reconciliation listed in the back of the press release but…

Thanks Tim. And maybe just to briefly to summarize although second quarter was a good quarter confirming our choices we took strategically and operationally. The growth potential in our markets remain strong especially in Colombia and Africa and you can see it was our digital lifestyle strategy is starting to work and obviously a key factor to achieve a kind of long term profitable growth for the company going forward. Looking ahead we reiterate our guidance for the remainder of 2014 and remain optimistic about the future growth opportunity for the group and just to highlight one more time remember where we have been coming from, this company is undergoing substantial transformation from a pure voice cash and carry business model to a very complex data digital lifestyle and multi-products level. So overall I think it's been quite a journey but we’ve seen the first positive signs continuing in this year. Thank you for listening and Tim and I will now be happy to take your questions.

(Operator Instructions) We will now take our first question from Mr. Nick Brown of Goldman Sachs. Please go ahead.

Just got a couple of questions, please. Firstly, in which region or countries do you see the most cost-cutting opportunities? And when do you think you'll be in a position to outline to us some kind of restructuring plan? And secondly, following the sale of Mauritius and Towers in Columbia, should we expect any further potential disposals to delever more?

I think it's a combination, let me take the first question when it cost optimization. It depends of course on the size of the business and the kind of market position we have. If you go to the marketplace is where we have more mature markets and have a very strong market share, there is probably a bigger potential than those markets which has investment phase and need to change the business model. So in some regions in Central America and in some regions in South America as well. And the whole approach is -- as I said to see what kind of efficiency we have and other big efficiency game we are going to look into more detail into as well is the factory, the technical size which will have an impact on operation cost but as well going forward should deliver as the target which we have set when it comes to the CapEx to revenue ratio. So it's those kind of elements we’re working on. And just to remind you again, this is an important point, this company has to add new kind of service function than it had in the past. So the history in terms of margin of the Company is always a good benchmark but the business model we’re in today driven by data obviously is substantially different. When it comes to the sales of Mauritius and our Tower deals as Tim said there is a key focus for us on the balance sheet and we want to make sure that we stay close to the kind of target we have when it comes to net debt to leverage or a sales situation to 1.5 times is kind of a level we want to achieve and non-core assets or assets which we don’t see fit into our strategy, we're always going to review. So there maybe few other ones but nothing in the kind of core business we’re running currently.

I think our assets have to earn their place on the bench and to the extent we can’t do anything strategically with them and they are not helping our return on capital then we will find ways of monetizing and the passage into structured assets were a good case in point on that, and hence now I think is a good deal.

We will now take our next question from Mr. Bill Miller of JM Hartwell. Please go ahead.

As you look out over the next six months, is Colombia the most obvious transformational event for you? And can you take -- and would you give us now your margins on your existing Colombian operations and the growth rate? And can you apply any of those techniques or ability to increase margin to Colombia? And is that the most transformational aspect over the next 6 to 12 months?

Colombia is a transformation deal and the most important piece for us in the next 6 to 12 months and that’s the reason we make it a kind of a focus point on our Capital Markets Day in Miami to run in more detail through the business model. Obviously we can’t speak -- because with the merger -- we can’t speak about UNE and it's business at this stage but we believe that in UNE itself and the cable business, it's upsell potential in terms of margins which if I know in the midrange of the 20% margin, around 25% margin and equally our mobile business in Colombia is in the mid-20 margin range as well on the back a very strong growth and very heavy investments in data but going forward it should be margin opportunities on the upside as well. And if you combine both business successfully you have the double effect. So if you get Colombia right, we will have a deep impact on the company going forward.

And can you talk for half a second about where you are with Facebook and what's going on there, and how you plan to capitalize on that alliance?

Interestingly, the results have been pretty different between Latin America and Africa, whereas in Paraguay, it has been not so much in upselling tool so far but rather be a kind of loyalty tool and brand enhancement tool. In Africa we can see it has worked much better in terms of upselling people to new data plans and going forward, it was kind of a test run and we’re very pleased. I think the key feature which is very successful that we have been able for the first time ever as an operator to integrate our sales function, upgrading functions into the Facebook mobile page. So it's a kind of a seamless experience for the people to use it which clearly is a model we can use probably in other places as well. So, we are happy, we’re fine, we see it as a good test case and we will continue to elaborate with similar kind of project in the future.

We will now take our next question from Barry Zeitoune of Berenberg. Please go ahead.

I've just got two questions, actually. The first is for Tim, and I was hoping you can give a bit more color on how you expect the effective tax rate to evolve over time, and also the cash taxes. It's been quite volatile in recent years, and any guidance you can give us on the kind of rate we can expect going forward would be very useful. And the second question is on Colombia. I know that you pushed very hard in the quarter ahead of a change in regulation that was going to impact the way in which you are able to subsidize handsets. I'm assuming that that change has now taken effect. How is it changing the way that you're marketing your product in Colombia given the restrictions on handset subsidies? And how is it impacting the market dynamics as well? Thank you.

On tax I think clearly, we’re a complex group operating on many jurisdictions. I think you know the (indiscernible) given you on the tax is that the charge that we incurred in Q2 is sort of pretty close to our expected run-rate for the full year. In terms of effective tax rate that is going to be hugely sort of influenced by some -- the non-operating non-cash items for instance the put and call revaluation, which we have to do each quarter. So I need to look at how best to give guidance on tax whether we -- through an effective tax rate or whether it's through another model but I think just to where we’re in the present time using the current quarters P&L charges, not a bad proxy of where we will probably get to for the full year.

And maybe I can answer the question when it comes to Colombia which is correct. We have been very more aggressive during the second quarter ahead of the changes when it comes to the rate of regulatory side in terms of contract durations and probably the kind of stop of handset subsidies. Going forward obviously then we will see an impact on the margins equally also on the growth of the overall market so there will be data potential that there will be lower growth in the markets but it's well then of course a better margin for us in the business. However we believe at this stage that most competition we will reinvest chunk of the money they are going to save in terms of subsidies in other pieces of the value chain, one is obviously advertising and promotion. Some is in sales and marketing channel and some maybe in the direct sales force. So it's not that the model will change completely but as of today we can anticipate maybe a bit less growth and widely improvement on the margin. Saying that, we’re close to be the number two now in this market on the data side but of course we have to observe the market dynamics and what competition is doing. So we may have to adjust a bit during the first quarter.

Just on the tax point, should we expect cash taxes and P&L taxes to be relatively close to one another, or is there going to be some divergence?

They should be close to one another. I mean obviously there will be timing differences through this period but I think there will be give or take close to each other.

We will now take our next question from Mr. Georgios Ierodiaconou of Citi Bank. Please go ahead.

My first question is a follow-up on the earlier question on Colombia. You mentioned that some of the handset savings will be reinvested in other purposes. Do you expect to see potentially any pricing pressure or any competition focusing more on price instead? And when you talk about a slowdown, do you think it will be a wider slowdown of the market, or will there be a slowdown in the market share gains which you have achieved over the last couple of years? My second question is on Paraguay and whether there's been any update with regards to any potential asymmetric [ph] regulation, or something I believe you mentioned in the past; and whether the market share declines that we've seen in the last couple of quarters may ease the pressure for there to be any asymmetric regulation imposed on you. And then a final question, which is more of a clarification. When I look at Central American revenue growth, a lot of that is coming out of other revenues which were up around 17 million versus the same quarter last year or roughly 50% up on that base. Can you give us an idea of what is driving this growth and whether it's a recurring item that we should assume continues in the coming quarters? Thank you.

I will take the first two questions and then Tim can answer the third question. Coming back to Colombia, we don’t believe at this stage the new regulation will have an impact on pricing and will initiate a price war. As I said there will be rather kind of diversion of investments into a sales marketing distribution and other kind of sales activities. So it's not a pricing issue, it's more that resources will be reallocated, but maybe on a bit lower scale than previously. This will have an impact as we mentioned maybe on the total market growth, not on our market share growth. So on the total market growth which obviously can reflect us but it's not a Millicom specific problem that we would slow down all our growth going forward. So just to be very clear, it's maybe the market which doesn’t grow as fast but not us. When it comes to Paraguay the -- as I mentioned regulation is not an issue at this stage, I mean the discussion is going on but it is nothing which is concrete or an issue. So we don’t have any kind of new insight would change this picture. Right now it's business as usual. Obviously there has been discussion about the kind of position Tigo has in this market but just to be very clear it's not about the position we have if we could use or misuse the position we would have been it would create an issue which we obviously are not doing. And yes of course this slight decline may help in the market share but it's not a big issue in that respect either. So we’re in constant talk with the regulatory and with the government and as I said we’re working on this front. For us the key issue in Paraguay really is more at this stage to make sure our brand revamps and our own network coverage, which – or network quality which has been a big issue in the last 12 months is becoming better as well. So business is as usual in Paraguay for the time being. Tim do you want to take the last one?

Yes predominantly the revenue that's under other in Central America relates to handsets and clearly that growth reflects the pushing of smartphones, the increasing data penetration that we have got there. Clearly Central America is probably our most penetrated market where we put our largest market position. So you would expect us to be pushing hard on maintaining that through the delivery of smartphones to customers.

We will now take our next question from Erik Pers of Danske Markets. Please go ahead.

On the Group margin, I understand it came a bit under pressure this quarter from the subsidies in Columbia. Is those probably coming down? Is that what you see will take the margin up in this second half to meet your full-year guidance? Or are there also other factors that contribute to this? And then secondly, I have a question regarding the dividends to minorities which you now disclose for the recent period. Are these what would see representative or what we should see going forward? Can you clarify the dividend policy and what we should expect when it comes to dividends to minorities? Thank you.

I think, Colombia is one aspect of it, I mean clearly it's a big part of our business and we pushed it very hard in Q2 to build our market share. We can see that easing off in Q3 and Q4 but that said, if we see the opportunity to continue to press hard to gain market share and gain subscribers and we definitely will do. Now we haven't changed our margin guidance because it's quite a lot moving in the group in the second half but I think we said that this is our year of investments and we see the opportunity to invest to achieve our goals then and frankly we’re going to do that in the second half. But that said there are lots of initiatives going around in the group but we’re looking at Hans-Holger mentioned the optimization projects that we have got in hand. I think we’re in a relatively good position for the future and to some extent if our margins rise significantly in the second half that isn't necessarily a great thing because that’s probably slowed down some of the growth that we’re able to pick up in the second half. On the second question, the dividends to minorities, we got sort of a full payout ratio policy on our businesses. Our principal minorities sit in Guatemala and in Honduras and Columbia. And to the extent there is cash in those businesses that is available to be distributed and we distribute them. To the extent that the cash is needed to investments in the business then we leave it in the business to be invested. So I can’t give you a percentage sort of growth rate on minorities and I think what we are showing you this quarter is probably a good proxy going forward but clearly it will change with the profitability underlying operations.

As a quick follow-up to that, has Columbia been distributing dividends to shareholders, the Columbian mobile business, over the recent period?

No we’re in an investment phase in Colombia, so we’re reinvesting everything that we’re making there back into the business.

We will now take our next question from JP Davids of Barclays. Please go ahead.

Two questions, please, the first one on Africa. To what extent do you believe that the investment you've made in this region has resulted in sustainable market share gains? And what level of margin do you think is needed going forward to defend and attract further top-line momentum? The second question may be more for Tim on the costs. You talked a little bit about corporate costs in your presentation. Can you provide a little bit more color about if there has been some costs shifted from the OpCos to the head office, the quantum of those costs; and also, a little bit of an outlook for the corporate costs line through the rest of 2014. Thank you.

Yes. If you look at the -- if we take the African question, if you look at the performance in Africa with close to 15% growth I think it's a very strong performance in terms of this market there we take in market share as we believe but in all markets which is a positive side. So the investment we have done in the network, in the brand and in the skill set are starting to payoff. Just to remind you when we started 18 months ago we were declining in terms of revenues and the margin was declining at the same time. So it shows that we can still turn the business around. The brand is intact and the customers are coming back. Africa as a whole will be -- its an investment case, it's a turnaround case but the idea we have with Africa is to get it's own funding, i.e., we're trying to come out of the investment phase pretty fast and next year already I think there should be in terms of cash performance and cash flow performance should be a kind of significant improvement which doesn’t mean that we scale back on our investment when it comes to network or information to 3G in some of the countries or even LTE. It's more that a lot of investments in infrastructure has been done. We have the skill set buildup we needed in this market and we should see a kind of continuous return of the investments we did in the last 1.5 year. So I think you will see the peak this year and then it will be much more balanced going forward. The gross profile should remain the same. The human [ph] penetration in Africa is still -- mobile phone is still pretty low maybe just between 60%. The transformation from 2G to 3G is in fully swing and there are many other opportunities like mobile banking like mobile entertainment which we just started to initiate in those markets. So in terms of growth I think it should be much better and going forward as well. And last but not least what we can see as well is that the competitive pressure has eased and has become a bit more structured in terms of how everyone is handling the market is terms of pricing and so forth and so forth. So it's a different picture than a year ago. Tim do you want to take the other part?

Yes on the corporate cost. You know sort of coming into the business just thinking and look at what sort of sat under the umbrella of corporate costs, a lot of this is activities undertaken on behalf of business which frankly could quite easily sit in the businesses or sit in the center. I’m not sure the allocation is of that, it doesn’t help too much. I mean to say that we’re spending too much on corporate cost but our EBITDA margin in the region is doing well misses point a bit. So I’m keen that we focus on the group EBITDA margin and where the cost actually land isn't a big driver of decision making or discussion, it's more about have we got the most asset in this business in terms of the margin that we’re able to generate from it. So I think sort of coming back to more specific question JP, where do I see it in the next couple of quarters and I think – the $70 million we booked in this quarter I think probably I would expect to see it at around at about that level in Q2 and Q3 provided we don’t sort of change the way we account for it but I think that is probably a decent sort of level to look at for now given the visibility that I have currently got in it.

We will now take the next question from Lena Osterberg of Carnegie. Please go ahead.

Sorry to come back to the corporate costs line. Just trying to understand if any of the EBITDA improvement seen in Africa is related to reclassification of corporate costs being moved from Africa to the corporate level. And then also I'm wondering why you decided to exit Mauritius. So what was the strategic rationale? And how should we then view other markets in Africa? What are your core criteria for keeping assets or divesting them? And then finally also on dividends, you clearly now state that you will take your leverage down. You've said that before once you consolidate UNE. But will you still expect to pay progressive dividends or is the primary focus to take the leverage down?

I will take the Mauritius question and the dividend question and Tim can answer very shortly the first question or I can do it. There is reallocation of costs on Africa to the headquarters. So no trend there.

What is actually driving the increase then? I'm just trying to understand why is it going up so much. Because last quarter, you said that the level we've seen was the normal run rate. So why is it going up?

It's a couple of things one of thing is sort of the reverse, it's the cost that we have taken on the center to help and drive our business in Africa and probably the biggest example is the people we have hired into our factory team, into our technical team, who are working on improving the network performance in Africa and frankly that is a hygiene factor for us because we can’t achieve our goals unless we -- we have got networks that do the job and I think it's probably not been a huge secret but we have had to do quite a lot of work on our network performance in order to drive the strategy. So in some ways it's been the reverse of the issue rather than reclassifying cost out of Africa.

So it is actually -- but it is costs from Africa going up to corporate costs then?

No that’s over simplifying it. Our technical team is looking at options across the whole of our business. Our business development team is developing the World Cup or the video-on-demand apps on behalf of all of our businesses. I don’t think it will help you by trying to sort of suballocate that corporate cost line into one part of the world or another part of the world because it's just not fungible in that way.

I'm just trying to understand the [bizarre] improvement in Africa. Will it continue to climb the second half of the year, or --? That's what I'm trying to understand by knowing where the costs are going.

Well the improvements in Africa reflects the growth in the revenue for Africa. We have a strong quarter, we have seen momentum there. We’re also pretty low base in Africa anyway and I’m not sure we’re satisfied with where we’re in the present time but we’re heading in the right direction for it. It isn't for the -- for the avoidance doubt it isn't that we have taken a whole load of cost out of Africa and stuck them in the center to make Africa look better. I mean that isn't our game plan, that’s not something --

Let me add one point, I think which in a sense a lot of this is comparable to the first quarter in terms of operation improvement as well if you talk about markets like Senegal, for example Ghana where we have much more efficiency. So it's an apple to apple comparison and the margin improvement is done by the business and not by the reallocation of cost. The thing about when it comes to Mauritius we see ourselves as a company operating business and not owning business. So the situation in Mauritius was a bit opposite, we had a 50% stake but we didn’t have any kind of management influence or Board influence, we didn’t have our own brand and if you can operate and manage a transformation, which is needed in that market as well from a kind of pure mobile play to a integrated digital lifestyle company then it's a kind of financial holding which we then have better resources to allocate cash and management time to. And that’s the reason why we decide to do exit and as a company in terms of those kind of portfolio review we want to focus on the operations we have, we want to focus on those business to transform them as I mentioned and if you can do this we stay in the market and we want to only be engaged in the kind of core activity of the business and if there is optimization potential when it comes to Tower deals or infrastructure obviously we would look at those ones in the coming months. Mauritius, was a very different case and was standing out a bit for us and that’s the reason why we exited it. And then I think the last point in terms of dividend, there is no reason to change any kind of dividend policy and dividend outlook. The company is very strong, the company is very healthy in terms of the business and there is nothing to discuss in the middle of the year after we just paid our dividend it's something for the Board I guess in the beginning of next year.

We will now take our final question from Andreas Joelsson of SEB. Please go ahead.

A question on mobile. You have a very strong growth in cable and MFS, of course, but what kind of trends do you see in mobile in terms of competition, subscriber intake and ARPU levels? We have seen a deteriorating voice ARPU going forward. Do you see an end to that basically, given less regulatory effects, or how should we see this?

I think we have to face with reality and we said this as well at Capital Markets 18 months ago that the voice ARPU is actually under decline and will decline over the next coming years, the question is how do we manage the decline so it's not going to come too fast but it's actually of course we will all move over to data and that’s a key change we had as a company 18 months ago that our core business which was standing for 90%, which was a very simple mobile cash and carry more or less disappears in the next coming years and we had to invent new model which is data with a lot of complexity and new services, hence the need as we discussed in length today as well the need to invest and the need of (indiscernible) cost. Equally on the data side we see very positive uptake, we see a good pricing structure, we see that data consumption is inline with data revenue more or less so, we charge data correctly, we can see a very positive sign when we bundle all services like Tigo Music in Colombia. When it comes to ARPU and churn we see positive impact on ARPU and churn on data when we bundle with financial services for example in El Salvador. So they are kind of new business we’re entering is positive, it's a good momentum and we don’t have too many concerns at this stage but again one of the key things we want to demonstrate in the Capital Markets Day to you is to show that if you do the transformation to data and if you do the investments we have been doing in entertainment, financial services and other services it has a positive impact long term on churn and a positive impact on ARPU. So the kind of future business model looks good. The old business model, we just have to manage the decline and migration correctly. More you will get at the Capital Markets Day in Miami.

As we have no further time available for question I would like to hand the call back to Hans-Holger Albrecht. Please go ahead.

Yes. Thank you very much all of you for listening in. If any more questions please do not hesitate to call Tim, myself or Nicolas, otherwise we hope we see you all at the Capital Markets Day in Miami or latest for the Q3 results in the fall. Thanks and good bye.

This concludes Millicom’s financial results conference call. Thank you for your participation. You may now disconnect.